tv On the Move With Rishaad Salamat Bloomberg April 27, 2014 9:00pm-11:01pm EDT
>> hello, everybody live in hong kong. this is on the move. taking a tumble in tokyo. obama heads to the philippines with plans for a stronger military alliance. and profit growth of china construction bank trailing its rivals. tension in the ukraine sending stocks in a southerly direction. seeing what's going on and how to follow through for the start of this week.
over to david. >> thanks. a lot of risk aversion continuing really across the region today. we're continuing to see that basically mostly across some of these markets and fairly pronounced losses i should mention. looking at the nikkei. it's really about the japanese yen. we see a little strength. just about at a one-week high against the dollar. look at taiwan. down 1%. australia, the one segment is keeping things are afloat are the gold mining stocks. gold is continuing its gains. as the demand. malaysia getting under way. president obama leaving and flies to manila later on this afternoon. so we'll continue to watch that closely. i mention it had safe haven
trade let's quickly chick in on some things we're watching. there we go. gold above 1300 back about 1300 n ounce yet again. anaheim ex crude here. just a tad below 100. u.s. dollar, don't let it fool you when it's green that means the yen is stronger. so that's what the happening. a lot of macro concerns over the tensions in ukraine. >> thanks. let's take a look at toyota now because it's set to move its u.s. headquarters from california to somewhere near dallas. >> all about costs. so if you take a look, attorneys -- torns california known as second to detroit as the u.s. auto manufacturing hub. many of the companies honda,
hundred ay, kia, have operations in california. they don't have operations in texas. so it is an unusual move. there are 5300 employees that work in the torns, california office. the relocation is set to happen outside of dallas. retention will be an issue. >> they had the same problem when nissan moved to tennessee and they had 42% chose not to relocate. railroad and it's unclear. -- 42% chose to. >> it's unclear how many will be asked to relocate because you could see them cost cutting when it comes to reducing the size of their workforce. they stabbed lished their operations back in 1957. decision to scale back comes as the company expects to report a record 1.9 billion. huge blow.
we know that texas governor rick perry has been very vocal in fact has launched ad campaigns in the state of california to encourage businesses to migrate over because texas governor rick perry has been very vocal in fact has launched ad campaigns in the state of california to encourage businesses to migrate over because of the incentives they would get on the tax front. that has got to be a key motivation for a company like toyota who is looking to perhaps minimize that part of their balance sheet. but toyota sales benefiting from the overall car market the decline in the value of the yen specifically. >> let's take a look at hoppeda. making headlines. >> because they mizzed their estimates. in fact, the net income rise 5.8 billion. that's for the 12-month period going to end in 2015. they are off by about 14% compared to the average estimate of those that we surveyed here and that's the highest gap in terms of what the analysts at bloomberg expect versus what honda had provided and that's the widest gap on record. take a look at what the executive vice president has to say. >> we missed our target mainly
due to the severe winter weather in the u.s. which halted our production line and the demand dropped. on the decline in the value of the yen top of that we were tight political turmoil and currency fluctuations in the emerging countries. >> we already know sales are falling in the u.s. market and china.sales falling in >> ok. let's have a look at how sow the rading and other movers in japan. >> not look good. honda down about 5%. some concerns really. the company's exposure to things like weather, demand, pushing forecasts below perhaps what the market says it could be making. toyota down 1%. and mazda motor perhaps bucking the overall trend and should mention that the overall picture in japan is not quite
as good as well. so mazda one of the few gainers. story here forecasting a fairly solid financial performance. but perhaps a little bit short of again what the markets are expecting from mazda and case up about 1%. now, tell co-, soy sauce, and imaging. what's the story here? it's not surprising we're seeing the gains here today because we did have a good pop on friday. the ratings uping their stock here to buy. fairly sound forecasts. plus announcing the share buy back of as much as 500 billion. so that's going to do it. e same sorry for the soy sauce maker announcing the share buy back. 10 billion yen here. and very quickly, oh limb pus. looking to change its organizational structure here.
bank which reported tomorrow. we have to watch out. >> thank you very much indeed. going to be talking more about financials later in the program. that's coming up in about five minutes from now. >> other stories making headlines out there as well. ge's plans to buy the rail derailed.uld be rival siemens is offering exchange for cash. says it's willing to match or beat ge's offer to management and position. would value alsome at about $13 billion. banning bit coin transactions, that's the country's biggest exchange for the virtual currency. clients can still use other banks. the government has been urging
financial companies to halt bit coin after trading surged in china. >> japan display having a rough time in tokyo. shares down 12% this after operating profits by about 11%. that's the big miss. the problem japan faces a weaker demand in lower prices for screen displays. now president obama is wrapping up his visit to malaysia today. his hird stop of four-nation tour of asia. let's that's the big miss. the problem japan faces a weaker demand in lower prices for screen displays. find out m. how significant was his stop over? >> find out more. how significant was his stop over? >> well, the last time an american president visited malaysia was some 50 years ago. so this visit is significant. it comes at a time when the trade accord or tpp is being negotiated. it is crucial that obama gets support from malaysia which some consider as a swing state. malaysia has more outstanding tpp issues than other countries
in the talks. while in malaysia the american president also reassured its allies that the u.s. will carry through its obligations it sent out a note of caution as well. take a listen. >> america has the strongest military in the world but we don't seek conflict we seek to keep the peace. we wanted a future where disputes are resolved peacefully. and where bigger nations don't bully smaller nations. all nations are equal in the eyes of international law. >> i think the president is heading to the philippines being oday and some deal inked ahead of that as well. it is quite controversial the stationing of u.s. troops there as well. >> you're right. security issues the main thing with the philippines. obama heads to the country with plans for a stronger military alliance. protests ahead of his visit to the country. a lot of to be achieved. the two countries will sign an agreement to counter china's
assertiveness of territory disputes. the u.s. by the way, it is treaty bound to defend the philippines in case of an attack. here's what the prime minister had to say. >> it is a sovereign country needs to make sure that it's able to monitor its area of responsibility. and lately the president has capacity improve the of our forces to have awareness of what's going on in our area of responsibility. and i think that will be an area of mutual interest between the philippines and the u.s. >> obama's visit part of the u.s. pivot to asia remains to be seen in asia has been convinced enough. >> thanks for that. let's check in on some of the
other stories making headlines around the world. four crew members from the korean ferry have been detained. involved in se vessel are in custody. 11 others had been arrested accused of negligence and of abandoning people in need. ferry was s that the loaded with far more cargo than it could safely carry. south korea's prime minister has resigned over this disaster. it's left more than 300 people dead or missing. ferry was loaded with far more cargo than executive power is largely concentrated in the presidency so it's seen as largely symbolic. the search continues. 188 bodies have now been recovered. about 110 still unaccounted for here although officials say the passenger list could be inaccurate. 17 h people survived -- 174 people survived the sinking including most of the crew. the search for the malaysian airliner is set to widen. the robot submarine which has
created a 3-d sonar map of the ocean floor. malaysia intends to release a preliminary report into the ystery in the next few days. the report has been sent to the u.n. sil aviation organization. our next guest says that most of the big chinese lender are buying ahead. joining us with her take on earnings on the moves back in two minutes.
report first quarter earnings. but icbc among those chinese financials out with results through the course of the next few days. china life out late friday in the falling mainland falling. up 14% in the last quarter less than ccb and the same as bank of china joining us now. thanks for joining us. >> i think so far the results are earnings profit growth has been slightly beating expectations. except for the expectations were so low. >> not too bad actually. i think it's because the so far income growth has been still quite healthy and the margin compression has been relatively slower than expected. >> one thing which people have been worried about is the state of credit or shall i say the credit quality of these banks and one thing we certainly
noticed nonperforming loans are rising. should we be worried? >> well, i think the market has priced in to rise for long time. and we did see on average come out by about 7% in the first quarter for the four banks reporting so far. so they will rise even more going forward. >> when we look at these banks and we have a look at how much the dividends are extraordinary. i mean, between 5 and 7% for many of these. why so high? >> because the price is high. -- the price is low. absolutely. but the thing is it's also saying that that would mean the people should be buying them as well for that yield. you're searching, but then you saying that that would mean the people should be buying them as well for that yield. you're searching, but then you worry about the price falling further. >> the payout ratio has been steady for the big banks at about 35%. so that's not a bad payout. d the price has been falling
so dividend yields 6, 7, 8%. very high. better than the deposits. >> you have a fantastic return on equity. you've also got probably price to book which is fairly decent. but they don't seem to be popular with investors. is it because the credit quality overrides everything else? >> well, there's two long-term issues. with the it quality g.d.p. growth slowing down as well as this massive stimulus since 2009 that the legacy of that. that's one issue. another over is the interest rate and the potential impact on the net interest margin on the banks which of course the banks 80% of the revenue come from margins. so that's a long-term concern as well. >> what can we learn about the chinese economy from these figures? and what should we look on the balance sheet for in particular to get a good picture?
>> well, we're seeing loan growth still at the pace of the central banks want them to be about seeing loan growth still at the pace of the central banks want them to be about 13% or so each year. and the other interest rate policies is also driving banks earnings. what s a lot of attention the central bank can do to maybe stabilize growth or help rowth because the g.d.p. growth has been slowing down in terms of, for example, any other potential policy moves. so i think the bank system is a reflection of mark rofment >> let's take a look at some individual names as well. who do you like the most in the whole intstri? >> well, we have the top rating on bank of china. we think it's defensive that the bank has 26% overseas operation and it's less affected by the domestic
interest rate liberalization impact. so we think it's -- and also domestically has a strategy to focus more on profitability, has been fairly successful. so that's our top pick. >> obviously to the other one who do you think? >> well, bank of communications . d the smaller regional banks bank of communication has been under margin pressure. income growth has slowed down. and the smaller banks, a lot of , wanting to ip ofrpblt honk conk we think it's difficult for the regional banks to perform. >> thank you very much. see how these banks are doing minutes or about 9 minutes from now when the hong kong session gets under way. we've got of course hong kong futures in the mix. see how they're doing competitive in the free market auction period. futures indicating perhaps a
were we're going to be in a stronger position to deter mr. putin when he sees that the world is unified and the united states and europe is unified rather than this is just a u.s. -russian conflict. >> that's going to obviously come pretty soon. monday for the u.s. >> but we had these eight captured european monitors. >> that's right. one has been released. he was the swede. they have four germans, a pole, dane, and check. he was released due to medical conditions. he had a diabetes problem. nothing huge but a mild one enough for them to release him. actually the head of the german forehas been -- they were
branded as spies. he said we're not prisoners of war. you can see currently. the released swedish prisoner. it is from the organization for security and cooperation in europe again. that's a crucial part of them and they are being held captive. also from the pictures again the special forces in ukraine severly beaten up. the fact the osc the head of the german four took responsibility for the whole head of the seven he said this about the conditions they're under. >> i can only say please help us. the people -- thank you. we are waiting. >> so the one's been released again the other seven are being held. already, one of the world's worst performing currency the ruble.
60 billion in outflows. capital outflows. >> uncertainty prevails again. sanctions one area. putin has been planning this obviously for years so obviously he has a plan. the next step already probably planned going forward. also, a crucial bit economic wise, the gas supply to the ukraine. it could be announced today an lternative source of gas crucial for that to happen it must be financed. if that is the case clearly russia's bargaining chip goes down significantly. that plan is to cut off as they have done in the last years the gas to the ukraine. >> thank you. let's turn to the stories making headlines elsewhere. crucial for that to happen it >> it's been a tough stretch with shares falling to one year-low friday in new york. china has been cracking down on pornography and the government
may suspend some licenses after finding what it deemed inappropriate content on the site. the strike at the chinese company that makes shoes for nike and adeed dass may also be over. most workers have returned to work at its factory. the dispute over pay and conditions began on april 14 and has cost the company about $27 million. settling the strike is set to by more oyee costs than $30 million this year. and india's icic bank has announced a record profit for the first quarter but shares fell on investor concern about rising defaults. customers are struggling to repay loans because india has some of the highest borrowing costs in asia. izzizz says nonperforming assets should come down next year. >> from here on if you look at and look forward, i think it would have been the peak in
terms of additions. in 2015 he additions to be lower. >> and those were the top ompany news. >> now saudi arabia is building the world's tallest sky scraper called the kingdom tower twice as tall as the empire state building when it's ready. how much will it cost and how high will it reach? a look at all the numbers.
it essentially provides the right ingredients, the right backdrop for u.s. stocks to extend a five-year bull market, also the prospect of interest rates. chief investment strategist compared the prospects for the u.s. economy and share prices. to gauge the economy, we're going to use the economic cycle weekly leading index. that's the white line on this screen. contrasted with the yellow line the fundamental stock index based on consumer sentiment prices for raw materials and unemployment claims. it rose this week to the highest level since october 2007. so you're comparing this right here to where it was back in 2007. how do you interpret this? essentially accordingly it's a good omen for the stock market. in the past, return economic expansions often endd with inflationary booms. that caused monetary policy to tighten. the boom was followed by a bust. but guess what.
that's not happening this time. and that's the key in the basis for his analysis. lpl agrease saying there will be a gain for u.s. stocks. they point to the fed's willingness to let the inflation rate move higher. let me show you this with the bar chart. the ratios for the s and p 500 with consumer price index. the highest average for the 500, 17.8 occurred when the cpi was between 1.5 to 2.5. ranges. the it goes on in increments of about 1. so this is where it was the highest. and that will give you a sense of perhaps the markets will go even higher. ut not everyone is optimistic. among those cautioning of a market collapse here. and also jim from wealth
capital management says we're going to have a correction to bring us back to where we started the year at. essentially renewed concern about faster inflation that may actually lead to a decline. i'll give you a sense of how markets are stacking up so far if you take a look at the s and p 500 so far over a 10-year period up 66%. but this is where you want to focus on the trend over the past couple years has been upward. since march 9, 2009 markets have essentially changed course and we've been on this upward tra jectly so that gives you a sense perhaps based on whatever analyst you decide to pick on you could probably expect to see probably some more gains if you believe what some of those investors are saying. taking a look at the u.s. stock market. > chief strategist and head of research. we have the prospect or the spector of war now looming in
europe. and that is spooking people generally speaking right now. and becoming more and more heated. >> what happened on friday is u.s. markets opened gap down from the lead that came out of germany from the dasm which was down 2%. and of course germany is most exposed immediately through the situation in ukraine. sanctions will perhaps hit russia. >> the energy more than anything else. >> as much as energy. germany exports an enormous of its good through russia. there's a close economic relationship. and if you start disrupting that then a major source for income for germany is being disrupted. so that's an issue. >> there's a close economic relationship. and if you start disrupting that then a major source for income for germany is but what really? s it really pay-back time as russia would like to put it because of what happened in the 90s and the collapse of the soviet union that we were
allowed to go in and take over places of raugs russian strategic influence and was able to do that fairly in a cavalier way that now it's time that mr. putin says enough is enough? >> i worked in germany in that period of time. and was there in 1990 when german unification came about. and the soviet union collapsed. and nobody at that time would have imagined that nato would extend to the russian borders and possibly even into ukraine. it was just unthinkable. and nonetheless because there was no real power in russia this is what happened. and at the moment russia has recovered some of its strength and is asserting its strategic interests. i think they have to be substantive negotiations about that. i think the best status for ukraine would be similar to finland and could be part of the west that could be -- >> not certainly part of nato.
>> but not part of nato. that's not going to work. and as long as that's clear and you talk to russia about it you don't need sanctions you need substantive negotiations. >> but eastern ukraine. will it secede? will putin go that one step further center nobody knows this of course. but what happens next? >> i don't think so. because i don't even think it's in putin's or russia's interest to have that happen. ukraine, a neutral then ukraine, then to have russians in ukraine and eastern ukraine actually gaurnlt that more than anything else. it creates a situation in which not only the ukrainians have the say but the russians as well. >> let's move on. that's one of the dominant themes at the moment. but what about what's going on in this part of the world? how closely to you watch the situation in china? i'm very interested in what you've been writing. the corruption crackdown is the
structural reform program. now, explain this to me. >> look, i was taken aback the i don't ht when -- know was your network or another one somebody had somehow discovered that corruption is a big issue in china, had traveled there had looked around network or another one somebody had somehow discovered that corruption is a big issue in china, had and said wow. of course it's a big issue. it's the biggest issue that they've been talking about since he came to power. anti-and at the same time in order to fight corruption, you have to reform and in order to reform you have to fight corruption. it's one and the same thing. it's a very dangerous thing. i think that's what people have to understand. he's going to take on a lot of the vested interest but has to who put o the people him where he is. >> that's true. >> but he's been cleaning up the pla, the people's liberation army. he's been cleaning up the soe's he went after china resources.
that's a huge soe, very powerful. he has gone after some of the largest companies in china to clean them up. and this is necessary at this point if you want to have private investment going into soe's which is part of the reform process, then you have to break this stranglehold of a few well-connected people there who are corrupt. >> well, let's move -- we have a lot to cover. of course many people looking for stimulus from china but we already have stimulus in japan rights now. the bank of japan governor, you notice something about what -- >> what color tie he wears. >> tell the bank us. >> the newspaper observed that ny time that he made a significant move for further quantitative easing his tie
color was red. and that when he was optimistic about the economy and said we don't really need to do any more the color was blue. so everybody has been watching now what is the color of his tie and what's going to happen next. and well i think red is out at the moment. i don't see that there's going to be significant amount of added easing right now. the inflation is at the level where he expected it to be. and they're going to ride this out and see what happens from the impact of the tax increase. >> thank you very much for joining us. now, up next. japan's plans to legalize casinos could be put on the back buncher. we're going to find out why when we come back in just a tick.
the stories we're tracking for you. a turning point for taking one of china's largest companies public. this is tuesday. we should be getting this prospect tuss and get you that. the company may command a $180 billion market value once it is listed. wednesday, ana and japan airlines in the mix here. the yen and the weakness of the yen and crude prices remaining high and weigh on these. jl may see profit fall. ana could see it tumble by as much as 50% there as well. also for wednesday there we have it. it's a final semi final lineup ere. being heory could end up an all-madrid final on may 24th nd i think it's taking place
in lisbon there as in lisbon there as well. on friday we get the state of mack ow revenue numbers coming through. as we're talking about gambling, let's talk about the odds lengthning on plans to legalize casinos in japan. the bill is unlikely to pass because of rising opposition in parliament. the gaming analyst is with me. now. why the pushback? >> nobody knows. quick answer. it is the japanese legislative process. it will take time. there's been i think a lot of give and take with hope that we would see passage as you will recall late last year. and then as the -- >> it seemed like it was going to be expresswayed through. >> and i think the olympic sort of really helped set that expectation initially because
this is a possible source of tens of billions of dollars of potential investment to help with infrastructure spend and this that and the other. so long and the short of it is we are going through this legislative process. there is hope that the promotion law does get out this spring before the session ends. this article that was out today as you mentioned pokes a little bit of a hole in that. lbs las vegas sands on the conference call late last week with earnings was asked. there was no real significant update. so i think we're still all a little bit in the dark fingers crossed that it comes through. >> we aren't even aware of where it would be. whether it would be spread around the country. >> the broad view is that this comes through hopefully this year. nd remember there's a second implementation that has to implementation that has to be put through in the next year and then there's an rfp process. hope is tokyo, hope is a couple of big mega integrated resorts.
>> live in hong kong with on he move. >> honda after warning on results taking sanctions to the very top the west targeting of vladmir putin's inner circle. and barack obama heading to the philippines with plans for a stronger military alliance. we do have concerns about rising defaults. three of china's top four banks still managing to boost profits there as well.
>> we have double digit profit increases very interesting to see that given the fact that bad loans are on the rise. the biggest banks last week and today and tomorrow finishing up the reporting season for those chinese financials. on friday we heard from china construction banks the second biggest by market value in china a 10% gain in first quarter net income. 10.5 billion and it a 10% gain in first quarter net income, $so.5 billion. and it comes as lending margins increase. that's been the consistent story for all of these chinese banks. they've increased their loan margins. that helps them boost profits. in the case of china construction bank, it's the biggest profit increase in a rear. rival agricultural bank also out with results. even though it reported higher bad loans. agricultural bank in china buffeted from the fact that it operates in rural areas. predominantly. and the asset quality there.
>> that's the thing, that's the problem with this all. you look at the yield on the dividend yield, you look at returning equity, fantastic. price to books, fine. then share price which dozen nothing for many of these banks because everybody's worried about the balance sheet. >> they are. the banks in china trading at record low valuations, including to bloomberg's look at those multiples in terms of earnings. also significantly lower and everyone, as you said, concerned about shadow banking. what happens in this sector. in 2013 shadow banking exposure, well, reached $6 billion yuan in terms of exposure. financing 2.2% of gdp in the first quarter. versus 123% five years ago. so this is a growing concern. fitch has warned on it and we've heard economists even in china talking about it as well. the people's bank of china advisor has said that they should set up a special fund to deal with rising defaults and that's really what we're
concerned about going forward. >> thank you very much. some lines dropping at the moment coming out of america at the movement. it's fisa -- pfizer could be renewing discussions to renew astrazeneca. all these tensions over at ukraine. >> yes. overall we are looking at a down day and perhaps just to put that into context. when you look at what's happening on this flat section for these big banks that have reported earnings here in hong kong, certainly is a little bit optimistic. we're just about flat here. fairly decent, i guess some analysts are describing these latest set of results from these chinese banks. obviously you're seeing profit growth. perhaps of course if these banks keep lending more it will hide the fact that it should be rising higher. that's a topic for another conversation. now, we'll stay in china.
the banks were the only ones reporting a decent set of results. insurers, for example, china life here, you see the stock reaction for today. first quarter net, they're falling close to 30%. it's the same story if you look across the brokerages, the steel income 7% drop in net here, for example. angang steel is down. in hong kong, we're looking at first quarter net dropping close to 50%. not earnings, we do have a report coming out of the f.t. today that perhaps 10-cent is in talks with these major film studio rosie in the u.s., perhaps raising the possibility that they may be able to stream the latest u.s. films to chinese homes. about two weeks after they're released over in the u.s. a lot of people are asking again, perhaps themselves do i get in right now? just broaden this out very quickly here and see what's
happening across the chinese markets. because we are certainly at the lowest of the day there. but hang seng index, here's a chart for today. we opened up, saw a little bit of fighting chance, then we quickly dropped to about 22,000. shanghai composite really the same here. it's been downhill ever since the opening bell. 13 points clear of the 2,000 level where i should not be -- should not have been traded give or take for the past two, three years? on that bright note, i'll send it back to you. >> pfizer are planning perhaps, set to be planning to have a renewed push for the acquisition of astrazeneca. if this did go through, because astrazeneca's market value is out $51.5 billion pounds, it would be bun of the conscious one of the largest takeovers in the industry's history. it's been a flurry of activity in this particular industry group as well.
that's what we have at the moment and a comment coming from the spokeswoman at pfizer. saying, we don't comment on rumor and speculation. not quite a denial, i can tell you that. toyota said they're relocating its u.s. sales headquarters from california to texas and jobs could be on the line and rival honda also making headlines. forecast that disappointed there. they want to move from torrance to dallas. >> yes. so for those not familiar,er to sense in southern california and toyota's 5,00 employees are said to be in the -- 5,300 employees are said to be in the process of relocating from there to a suburb of dallas. this is according to people familiar with the matter. it's a cost-cutting move. there are a couple of things at work here. if you take a look at the tax incentives both on the corporate side and on the personal income side, a lot more better in texas compared to california. in fact, governor rick perry of texas has been very vocal in
launching ad campaigns over the past year and a half, over 50 companies have moved and relocated, that's about 14,000 employees in california have moved to texas to take advantage of the tax incentives. it's clearly a blow for california and a win for texas. but what's interesting is that it's unusual because southern california is second to detroit, michigan, in terms of being the hub for auto companies. you have honda, houston day, i cana, mazda, miss beneficiaryy there. many have their finance departments, their sales departments and their h.r. departments located in southern california. and so as of right now, we understand that there will be a meeting later on monday in the u.s. where employees will get a lot more clarity. it's unclear if all 5,300 will be asked to relocate. >> mixed results. nissan moved i believe to tennessee. >> back in 2006. >> 42% of the work force said that, yeah, ok, we'll come along with you. >> that's right.
aside from the fact that there might be retention issues, if you take a look at california, it's really trying to take a stance in its clean air initiatives and it has the highest number of clean cars being sold there. so energy efficient cars, specifically the prius, is number one in the california state. and so the question is, will this have a consumer hit or is this just an employee-corporate story? >> we missed our target mainly due to the severe winter weather in the u.s. which halted our production line and the demand dropped. on top of that, we were hurt by safety recalls, thai political turmoil and currency fluctuations in the emerging countries. >> of course that was honda specifically. honda, but of course that's what i was going it talk to you about as well. they had a miss. >> you actually just heard from
honda's executive vice president talking a little bit about the reasons for why their forecast is going to miss estimates. if you compare their estimate, $5.81 s about 5.-- million for the fiscal year, the 12-month period that will end on march, you compare that to the average of those economists, those analysts i should say that we surveyed here at bloomberg, it's 14% off. est gap of 14% is the wide on recovered. some of the reasons that the executive vice president alluded to are at play. again, the fact that you're going to see sales falling in the u.s. compared to other companies and if you see how the accord is doing, which is one of their most popular brand, sales declining in china. you can also talk a little bit about the weather, the executive vice president mentioned it. but this is a big miss in that stock. not doing well on the session. >> thanks. just getting you to some stuff coming through from malaysia. we have president obama wrapping up his visit to the country there. this is the third stop of his four-nation tour of asia.
as you can see, that's the aircraft staircase. he's on his way out. off to the philippines for that last leg of this asia pacific trip. let's find out more. how significant was the stock in koala lum purr. >> it is significant. it's almost half a century since the last time an american prison visited malaysia. so this visit is significant. it comes at a time when t.t.p. has been negotiated and it's crucial that obama gets the support from malaysia. which some consider as a swing state. malaysia has more outstanding t.p.p. issues than other countries in the talks. now, while in malaysia, the american president reassured his allies that the l.s.u. carry through its obligations -- will carry through its obligations. it also sent out a note of caution. take a listen. >> america has the strongest military in the world but we don't seek conflict, we seek to keep the peace.
we want a future where disputes are resolved peacefully and where bigger nations don't bully smaller nations. all nations are equal in the eyes of international law. >> there he is, about to get onboard air force one. security, talk about security when he's in manila. >> obama heads to the philippines with plans for a stronger military alliance. there's been protests ahead of his visit to the country. still a lot to be achieved. there's expectation that two countries will sign an agreement to counter china's assertiveness over territorial disputes. now the u.s. by the way is treaty-bound to defend the philippines in case of an attack. here's what philippine finance minister has to say. >> the philippines is a sovereign country, has needs to make sure that its able to monitor its area of responsibility. lately the president has decided
improve the capacity of our forces to have awareness of what's going on in our area of responsibility. i think that will be an area of mutual interests between the philippines and the u.s. >> there you have it. live pictures of president obama. his visit to asia, part of the u.s. pivot to the region. it remains to be seen if asia will be convinced enough. >> indeed. the president has been keen to of course emphasize that reboot or i shall say his pivot to asia and reboot that after it being announced a couple of years ago. there he was getting on the plane. off to manila in the philippines. we're going to discuss what's moving the markets.
>> coming to you live from our central hong kong studio. we're getting more on the markets. with us now is the head of asia multiasset strategy bearing asset management, overseeing already $55 billion there. thanks very much for coming. >> how are you? >> i'm good. tell me, let's talk about these concerns that are coming in. it's geopolitical problems here. ukraine weighing on investor sentiments, certainly in germany, which fed through into wall street. have we got that here as well? >> yeah. i think in the short-term, that's the excuse i think that traders are using. i don't think that it is a real game changer.
i really don't think so. but the problem is we had the fall of the biotech and the fall of social media stocks and that i think was the really more fundamental driver of markets in the u.s. especially in the short-term. >> you would have thought that some of that would have -- that negative investor sentiment regarding technology would have changed. >> valuation is very high. i think that there is -- >> apple as well with that stock split. >> indeed, indeed. i think there's a volley in apple, as well as facebook. but there has been a swing from growth or high growth or supergrowth back to value. i think that that has happened because i think that some investors got cold feet. that perhaps they pay too much for the -- you know, for these biotech or for the social media stocks. >> i think the new growth stocks, aren't they? you have the growth stocks which
are t.m.t.'s in the early 2000's. the new growth, biotech and social media. >> there was a new china and hen there's the new u.s. i think it's more sensible. i prefer this kind of market to the one where last year it was totally dominated by this super high growth at super high valuations. that worried me last year. i think it's more sensible now. >> the thing about this is that, don't you get suspicious when you see this new in front of something? >> yes, of course. >> we have the new normal, that's deeply suspicious as well. >> indeed, indeed. i think that it is a nice word to use to describe something. >> it's always new and different . let's talk about the new china then in that case. does it keep going up? i'm talking about the economier or are we going to have slub --
economy. or are we going to have sluggish growth? >> the g.d.p. is now worth about $8.7 trillion u.s. $le 8.7 trillion u.s. for $8.7 trillion to grow by 7% this year i think is asking way too much. i think that investors have to realize that 5% to 6% is actually quite a good growth rate for china. as long as earnings per share growth behave. rather than, you know, falling apart. when you have slowing growth like that. i think that investers have to be more realistic. >> i think they've got to deal with certain things such as the structural reforms that they want to put in place. perhaps this huge inventory overhang and excess capacity. >> absolutely is. so that's why i think that 5% to 6% growth. that's what we predict long-term for china. over the next three to five years. 5% to 6% is actually a very good rate of growth for china. that will allow interest rates to fall a little bit.
because at the moment for the private sector, in china, they're paying a very high real interest rate. and that is killing them at the moment. because when you go to the shadow banking sector in order to borrow, you pay a very high rate for that. so in fact, i prefer china to slow down somewhat and for interest rates to fall a bit more so that the stock market -- >> exactly. we're already seeing signs of that in agricultural banks, some of them have been able to cut their ratios. >> yes. i think some rural banks have been allowed to do so. which is good. because i think that that will allow them to make more loans. the commercial banks, the citibanks, not yet. i think that money in china is too tight at the moment. really. >> let's talk india. let's talk indonesia and india because both have elections coming up. a bit of a disappointment for the front runner in indonesia and at the moment you're
suggesting that perhaps modi may not get it his own way. >> like many people have commented, when you run the prove ins, it's different from when you run a nation. because, especially in the case of india, there are so many different factions. and so i think that to extrapolate from what mr. modi was able to do in the province to a nation i think he's dreaming. i think that he's had a dream run and that dream run will hit reality at some stage. >> it's too much. >> i think so. i'd say if you're very long india, take profits and go elsewhere. or maybe your career, maybe china is cheaper. >> having you on the program as ever. great.
meaning all 15 of those involved in the navigation of the vessel are now in custody. 11 of the crew members, including the captain, had already been arrested, accused of negligence and of abandoning people in need. there are also reports that the ferry was loaded with far more cargo than it could carry safely. against the back drop here, the south korean prime minister resigned over the disaster that left more than 300 people dead or indeed missing. the move is seen as being symbolic. the search for the remaining victims continues. 188 body haves been -- bodies have been recovered. officials say the passenger list could be inaccurate. 174 people surviving the sinking, including most of the crew. the search for the missing malaysian airport has said to widen as the scan of the sea bed nears completion without finding a single clue. the submarine created a map of the ocean floor where we had signals consistent with the plane's box. but that was on april 8.
malaysia intends to release a relimbnary report on the mystery in a few days. pro-russian groups have freed one of the hosce observers being held captive in the east ukraine. they put that down to medical reasons. earlier they appeared in public under armed guard and said they were not being mistreated. insurgencies have taken a number of people hostage including pro-ukraine activists. of course for all our top stories, including more on that, go to our website. it should be your online source for business and market news each day, every day, 24/7. check it out. that's at bloomberg.com. now, saudi arabia is building the world's tallest skyscraper. it's called the kingdom tower and it's going to be more than twice as high as the empire state building. how much did it cost, though?
we have the regional index here for this spot of the world. lows we haven't seen for something like two weeks. people have been really -- investors have been weighing out company earnings. we also have the prospect of those additional sanctions against russia over the current crisis taking place in the ukraine. let's kick it out to singapore and also have a look at what's happening in taiwan there as well. there we have it. ie ex and taipei just off -- taiex and taipei just off a fraction. manila down as we await the aprifle of president barack obama there. up next, vietnam's seeing several offerings missing their targets. we'll be live in hanoi. ♪ >> japan dragging equities
>> stocks in japan are pulling things lower. shy of 14,300. look at the picture in japan. that's how it looks for the session. we are looking at yields on the 10 year. 61.9 to be exact. a few stocks we have been following, in terms of capital, structure, some changes as far as organizational structure is concerned. in april,g, starting
that's the story with olympus. the story has been about share buybacks. they announced share buybacks friday and we are continuing to see gains. japan display. .t dropped to the lowest 13 and a half percent. let's switch gears and take a look at what is happening in australia. mining shares worth 1300. if you look at what is rising, it's sharp gold seeing fairly
gains. fairly sharp gains because of this. >> thanks for that. stocks in vietnam have reached multi-year highs. the ipo market is in a slump. let's get the story from our bureau chief. why have they fallen so short? >> the numbers are pretty sharp. they have only managed to raise 35% of what they set out to. is pretty clear. many of these companies just aren't prepared to ipo. they have been lackadaisical. they want to get out of the gate because they have to.
it's not as effective as it should be, yet it eats up a lot of the capital, so the prime minister has laid out an aggressive goal in selling shares by the end of 2015. that puts immense rusher on these executives. pressure on these executives. they will face reprimand. they fear they have to do it. >> what about overseas money? our foreign investors looking to snag some of these? >> we have only had one big ipo participated.s i think there is a lot of feeling the foreign investors
are waiting for the big game there is information in. , soe is a national carrier if that has been delayed over the course of at least two years, so a lot of people are waiting to see if that will happen this year. i think people feel that would be a more true test of foreign investor sentiment about ipos here in vietnam. >> thanks for that. from hanoi to jakarta, the biggest micro-lender in indonesia is thinking of a breakthrough development. how are they going to do that? thendonesia is going to be first ranked in the world to satellite. they are
expected to witness signing of an agreement in indonesia. bank urgently in need to own a settlement along with cutting communication. that's currently quite high. ofre is a huge amount communication. 80 years since the launching of the satellite. they hire including top players. own three have their satellite. they are spending for the -- $43.2 million a year. 9800have as many as branches. other points of communication.
to launch its own satellite they have allocated up to $216 million. they will be utilizing 82% while the remaining portion will be offered to the government. arrival -- they will likely operate their own satellite in 2016. photo frame that can be updated from anywhere in the world within seconds. we are putting it to the test. after this short break.
what exactly does your company do? >> we make a system of hardware and integrated software. you can send photos across the cloud. we have been added for a little while now, and we are doing very well. >> what are the complications cloud.ng yours on the to implement well ahead of schedule. >> walk me through this. thedoes the frame go into cloud? .> we are looking at a wi-fi .he frames just happen
a startup.considered how has this allowed you to move to other emerging markets? >> we are very consumer riented. the fact we can go to a different geographic location for that means we can push is very which lucrative. >> one of my colleagues is in sydney. he has his smartphone, and he's going to take a photo. i want to see if i can get there. how is it going? >> how are you? excitement in sydney. it is a rather inclement day,
but i am happy to do this little demonstration for you. i think we can do it. >> let's see. i'm giving it a go. i'm going to take a photo. >> are you going to take a selfie? is that what you are doing? >> i am taking a selfie. >> with ellen degeneres? she didn't want to join you? >> not today. , and i amal hero sending that now. we will see if this works. otherwise, i have got no idea how to use technology. >> we will wait to see when that goes on, but let's get back to he usesersation on how the cloud. you just have dan taking photos. he is taking one in a public
forum, but he could choose to take one in a personal for him, and his concern could be andrity -- personal forum, his concern could be security. >> everything comes down to risk management. what it boils down to is companies like microsoft, they are better at security than we are, so we prefer to rely on them to take care of that. >> take a look. man.he >> there is nothing like a live test. selfie.n interesting he got his centering off. >> it applies for your personal , which is huge for us.
it has applications for consumers. >> which one uses the cloud more than others? one of the benefits is flexibility. >> the cloud is changing things up. if being used by everybody. we are one step down from the consumer. business ited the was just a few of us. too different from what individuals are doing. we can tap into the cloud and scale up quickly. that's what we have done. and softwareware integrated business. it's pretty sophisticated tech knowledge he. -- technology. five years ago this would have been impossible.
it's huge. >> what are the peak times of usage for consumers versus businesses? christmas tape. >> because everybody is getting it under their christmas tree. >> over 48 hours we ramp up 40% , and that's continuous. that's continuous. that phase. this is an just website rousing. each screen is a permanent connection to our servers. we are allowed zero percent downtime. it is heavy-duty infrastructure. we could not do this on our own. >> are your competitors using the same type of platform and terms of using the cloud for this type of product? >> they are not really competing. everyone is using it. i can't imagine trying to do this. the ability to move into
different locations -- this is key to that. we had to make sure we could comply with the safe harbor directive, and our cloud-based service providers had all compliance taking care of. we don't have to do that. i don't have the massive legal team to do that. >> how much cost saving? >> on a day-to-day running basis, maybe 66% saving i would say. is biggest saving for sure the fact that if we were doing it ourselves we would have to have infrastructure at least ask anticipate thee requirement. we can spin it out 24 hours in advance. that reduces our risk. >> you are more nimble. you are a smaller team, so you can't wait. otherallows us opportunities. >> any disadvantages for your
team? >> none that i can really think of. only thing is if you are a startup one of the key things has been disciplined in planning. this can make people relaxed, but we have a great team. we plan well. >> i want to see if my colleague is still on the ground. are you still there? >> i'm still here. >> i don't know if you got a message, but i told my producers to make sure you had a week and a hot pink boa. i don't see any of those in your selfie. >> i am sticking with the bruce willis of bloomberg tv. some great snacks should be flowing through now. >> would you buy something like this? do you think there is a market for this in sydney? >> absolutely. i think it real-time photos to
matter where you are in the world, 10 years ago when i was a backpacker and didn't have a phone i would take the photos and send them in the post, but for parents at home to have this updating in real time certainly does that. certainly a wonderful way to have photos almost appear instantaneously anywhere in the world so very good. >> when you can send me that picture with the afro. my thanks to you for playing along. that's just the latest in our cloud cover series. we will be having a lot more going on next week. up next, one of the biggest names in the musclecar world is
>> we have got a turning point for one of china's biggest technology companies. they expect alibaba to file. that's something that should happen in the u.s. an eye on airlines, out with thean air latest numbers. the higher crude price could weigh on these carriers. a n/a could tumble by as much as 50%.
finalampions league confirmed. it could be the first. rivals athletic oho facing chelsea. we see april revenue numbers in the last quarter down. droppingrofit at china -- jumping 50%. ge's plan to buy the french rail company could be derailed. plus cash in exchange for the power business. siemens said they are willing to be management positions. has beenchants bank its coin transactions. it closed accounts with the for the data exchange
virtual currency. clients can still use other banks. the government has been urging financial companies to halt bitcoins after trading surged in china. japan display taking a hit in tokyo after earnings missed estimates. japan is facing weaker demand and lower prices. released itss has highly anticipated chevrolet camaro, with 500 horsepower. matt miller went for a spin. >> you need to teach me how to do this better. >> are we driving? >> marks a job is engineering cars like the brand-new
supercharged camaro z 28 for general motors, but he is better known for the guy who literally wrote the book for pro touring in vintage vehicles with modern power and handling. >> you want to check the tires? ♪ are sitting on a roller coaster ride. your job is like your hobby, and your hobby is like your job. when you were doing a 69 camaro, do you take the same kind of approach when you look at this camaro? >> yes. moste 2014 z28 is the track rated camaro ever made. its focus is on handling and stand rather than horsepower alone. only the nameplate is a throwback to the 60's era
camaro. what are the highlights? is juste the engine great. it's really retractable. awesome and works really well. we really went after breaking. we need a strong tire it's. >> the z28 will come with a stick shift, proof that it was engineered by a true car guy, not a bean counter. qwest my first job was doing showrooms racing. -- >> my first job was doing showrooms racing. kidink about when i was a reading all those magazine articles, and now i am writing that history. this is a dream come true. this is exactly what i want to do. coming up next is asia edge.
qwest we are live in hong kong, and this is asia edge. taking a look at our top stories. a warning on rosset and honda taking a hit in tokyo. -- on profits and honda taking a hit in tokyo. three down, one to go. can i see be joined rivals in boosting profits? >> also coming up, president for the philippines
and the final stage of his tour. we are going to assess the highs and lows of his trip so far. the imf releases its latest for asia. also is optimism but concerns. we are going to take a look at the four major risks facing this part of the world. to makeunced push offerings missed the mark. i am watching the market for all of you as we kick off a new trading week. at, is what we are looking fairly mixed but not exactly a day for the bulls to put their hat on. you're looking at the third day of losses across the region. three main themes today. we have tensions in ukraine and russia getting the best of risk appetite.